Barclays has confirmed it will buy the retail banking business of Tesco Bank for roughly £600million.
The Big Four financial institution agreed to acquire the bank’s credit cards, loans, savings and operating systems, as well as its 2,800 members of staff.
The announcement follows widespread speculation that Tesco would sell its banking arm to focus on its supermarkets.
Included in the deal is Tesco’s credit cards and unsecured personal loans which total around £8.3billion.
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Barclays will take over Tesco Bank in a deal worth £600m
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Furthermore, Barclays will also take over approximately £6.7billion in customer deposits from Tesco Bank. Employees of Tesco Bank will transfer over to their new employer over a period of time.
However, certain elements of the supermarket bank are not included in Barclays purchase , including insurance products, travel money and ATMs.
Over an initial 10-year period, Tesco has said Barclays will be permitted to sell Tesco-branded banking products and services via the supermarket’s own channels.
The supermarket giant will get an income for the use of its bran and for growing customers through its own channels.
Furthermore, Barclays will participate in the Tesco Clubcard scheme which continues to be the country’s largest loyalty scheme.
According to the retailer, the deal with Barclays will assist Tesco in trimming its debts and strengthening the balance sheet.
It also hopes to focus primarily on its core retail business amid the ongoing supermarket price wars during the cost of living crisis.
Ken Murphy, Tesco’s chief executive, outlined why this acquisition will help the supermarket bank’s existing customers.
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He explained: “Tesco Bank is a strong business that has helped millions of loyal customers to manage their money for more than 25 years.
“As we look to the future, our aim is to be the best provider of financial services in the UK, with this strategic transaction and partnership with Barclays unlocking greater value for customers and for our business.”
CS Venkatakrishnan, Barclays group chief executive, added “This partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business.”
This move from Tesco comes shortly after similar decisions from other supermarket banks, including Sainsbury’s which announced a “phased withdrawal” form its banking division last month.